Porting mortgage - Can I pay off money on existing loan with money from new loan

holly_hobby

To be crystal ....the term porting only relates to the mortgage product (fixed, discount etc) but NOT the underlying or any os borrowings.

When OP sells house no 1, the os mge on that property is completely redeemed from the sale proceeds by the solicitor. The mge on the new home is essentially completely new borrowings (even if the balance is the same or even less than previously owed), and accordingly assessed as such ie the whole amount goes through full status and underwriting checks.

If the rate is ported, it is done so on the amount of borrowings it applied to at completion on the "old house", for the remaining term of the product and mge applying to their new house. With the mortgagor generallly choosing a supplementary product for any residual amount that the ported rate doesn't apply to. Or of course the mortgagor could have the residual borrowings on SVR/BMR (generally penalty free), make their lump sum reduction when reqd to that element of the borrowings, and then tsf the whole lot onto an existing borrower rate when the proted product ends.

If you don't port the existing mge product, you will suffer ERCs, there is no avoiding it, its contractual.

Hope this helps

Holly

JimmyTheWig

Still not sure I'm explaining myself properly, but I think
(a) I've got enough of an answer to suggest it's not going to work, and
(b) if I can't explain it to you guys who know what you are talking about, I'll have no chance of explaining it to Santander!

I'm not trying to save money on ERCs. I'm trying to move an amount of money (an amount that I am allowed to redeem without ERCs) from one mortgage product to another. To benefit from a lower interest rate.
If I had a spare £10k I could do this and replace the £10k.
If there wasn't a 70% LTV limit on the mortgage then I could do this and, within a few days max, be back under 70% LTV.
It's just frustrating that in my situation I can't do it.

I certainly don't want to do anything dodgy or fraudulent. I think the ability to do this at completion should be possible, though I can understand it is a little tricky for the systems and processes to cope with and can understand why it's not possible.
I don't think the borrowing the money from parents idea should really be allowed, as there's nothing to say that they will get paid back from the proceeds, but I wan't sure that would be the case.


Will see what money I can pull in from various accounts. A 2.5% return on a couple of weeks means it is probably worth cashing in my S&S ISA...

piratesu

I don't think Santander will let you do this as you say. Borrowing the money short term might be a way, as long as there are no repayments to factor in to tell the lender about precompletion. Could be more hassle than it's worth to be honest, so depends on the money saved as to whether its worthwhile pursuing privately.

StuC75

You are explaining yourself, but it wont really work how you want it to..

If you had 10k of your own then yes you could overpay that whenever you want - as per the limits of the current mortgage.

But if you need to lend that £10k from family to pay it off now, and then increase the amount that you borrow on the onward purchase (to repay the family member the £10k back); Then the lender \ solicitor is likely to query where such surplus funds are going.

The mortgage company would essentially review
* what equity there is then following the sale of property A (after paying all fees & the 'temporary' redemption of mortgage pot 1).
* Look at the Price you are paying for Property B, along with total amount you will then be borrowing. the difference here being the equity being put down following the sale.

The lender may ask questions if there is seen to be a large difference left over.. possibly referring the application or insisting a larger deposit is seen to be put down on the further purchase (eg Minimise the amount that is lent). I had Britannia asking the same questions over 2 years ago when moving..

As this is with the intention of saving £250 over 2 years.. its a lot of work

JimmyTheWig wrote: »

Still not sure I'm explaining myself properly, but I think
(a) I've got enough of an answer to suggest it's not going to work, and
(b) if I can't explain it to you guys who know what you are talking about, I'll have no chance of explaining it to Santander!

I'm not trying to save money on ERCs. I'm trying to move an amount of money (an amount that I am allowed to redeem without ERCs) from one mortgage product to another. To benefit from a lower interest rate.
If I had a spare £10k I could do this and replace the £10k.
If there wasn't a 70% LTV limit on the mortgage then I could do this and, within a few days max, be back under 70% LTV.
It's just frustrating that in my situation I can't do it.

I certainly don't want to do anything dodgy or fraudulent. I think the ability to do this at completion should be possible, though I can understand it is a little tricky for the systems and processes to cope with and can understand why it's not possible.
I don't think the borrowing the money from parents idea should really be allowed, as there's nothing to say that they will get paid back from the proceeds, but I wan't sure that would be the case.


Will see what money I can pull in from various accounts. A 2.5% return on a couple of weeks means it is probably worth cashing in my S&S ISA...

JimmyTheWig

StuC75 wrote: »

The lender may ask questions if there is seen to be a large difference left over

Just as an aside, there is going to be quite a lot left over, as we want to use some of the equity to do some work to the house once we've moved.

But that is all easily explainable.
The family member loan isn't, so I think I'm happy to give the idea up.

StuC75

Is the property mortgageable in its current condition? or is it just to 'refresh' it to your likings? would such work add to the value of the house.. these could raise 'concerns' with the lender..

obviously much depends on personal circumstance - e.g. if borderline on affordability scales.

If the amount being borrowed is

JimmyTheWig wrote: »

Just as an aside, there is going to be quite a lot left over, as we want to use some of the equity to do some work to the house once we've moved.

But that is all easily explainable.
The family member loan isn't, so I think I'm happy to give the idea up.

JimmyTheWig

StuC75 wrote: »

Is the property mortgageable in its current condition? or is it just to 'refresh' it to your likings? would such work add to the value of the house..

Valuation has been done. We haven't seen it yet, but are told the mortgage offer is on its way. So I guess that means it is mortgageable.

It's partly to modernise the place (current owner is an older lady who has been there for 37 years), partly to make it more to our taste. Would like to think it will add value but as this will be our "forever" home and mortgage (including borrowing to make the changes) will still only be 70% LTV adding value isn't our aim.

pjread

So you can save 1.25% on the rate.... so 2.5% over 2 years or 6.25% over 5.... how many years has your original product's fix got left to run, and how much is the ERC?

If it's 1% per year or less I'd be looking at paying the ERC personally.

JimmyTheWig

pjread wrote: »

So you can save 1.25% on the rate.... so 2.5% over 2 years or 6.25% over 5.... how many years has your original product's fix got left to run, and how much is the ERC?

If it's 1% per year or less I'd be looking at paying the ERC personally.

Just under two years left on the original product.
ERCs are something like 4%.
So not worth it.

pjread

JimmyTheWig wrote: »

Just under two years left on the original product.
ERCs are something like 4%.
So not worth it.

Ouch, pretty steep